The business community began discussing President Vladimir Putin’s order to lower insurance premiums for small and medium-sized businesses (SMEs). It was given at a meeting on socio-economic support measures for regions.
“Consider the issue of amending the legislation of the Russian Federation on taxes and duties aimed at reducing insurance premium rates by 15% overall for insurance premium payers included in the combined SME register”, the Kremlin website said.
There are currently 5.9 million SMEs on the combined registry. In addition to the government, the Council of State’s specialized commissions should also work on order. The deadline for the execution of the presidential order is July 15.
Initially, the attempt to liberalize insurance rates was put forward by business ombudsman Boris Titov, supported by the Ministry of Economic Development. It was assumed that the decline would only be temporary for 2022.
Now, on behalf of the president, it is planned to reconsider the possibility of applying a reduced tariff to the entire amount of earnings, without a limit in the form of a minimum wage, said Vera Kononova, deputy head of the analytical research department. The Institute for Comprehensive Strategic Studies, explained.
“The measure under discussion is actually lowering the level of taxation of the minimum wage with contribution margin. Now this part of the salary will be taxed at 30% and will be 15%. In 2022, the minimum wage is 13,890 rubles, so the reduction in the burden for the employer this year (in case of adoption of a new tariff) will be 2,084 rubles. per month for each employee, ”calculated Kononova.
He explained that when taxing insurance premiums, the salary is split into two parts: the minimum wage and everything above it. The minimum wage is subject to 30 percent, the full amount above is 15 percent. The President also offered to take 15% of the insurance premium from the total amount.
The average salary in the SME sector is 30-35 thousand rubles. monthly. As a result, the proposed norm will reduce the employer’s burden for an employee by about 28-32% per month, the expert calculated.
Kononova emphasized that this measure will be most noticeable for companies with a large number of low-paid employees, since the minimum wage occupies an important place in their salaries.
Better to take money to the bank
The idea of a possible reduction in insurance premiums found support in the business world. “This is a hygienic minimum that should have been made a long time ago. And most importantly, it should be a long-term solution. Final paper. Not less than 10 years old, Anastasia Tatulova, founder of the Anderson family cafe network, told socialbites.ca.
He said that entrepreneurs are no longer ready to invest in long-term projects. “There are conditions for investing in the opening of only some online stores for the sale of Chinese electronics. Industrial production, on the other hand, is investment-intensive, long projects. “It is now more profitable than a job to deposit 20% in a bank,” Tatulova said.
The businesswoman said she was “categorically opposed” to discounted insurance premiums that apply only to small and medium businesses. “There are no medium-sized enterprises in our country: according to official statistics, 18 thousand out of 6 million SMEs are from SMEs. do you represent Less than 20,000 for the whole country. medium-sized companies. That is, it is very unprofitable and impossible to grow in business. The number of self-employed couriers is increasing. This is what all the efforts of the authorities responsible for the national project to support SMEs lead to, ”Tatulova was indignant.
According to him, insurance premiums “for all non-primary non-state businesses, without exception, entirely” need to be reduced.
“And above all for industries that are already employed or will be ready to work for import substitution. “My opinion is that anyone who has to deal with the consequences of not supporting production in the consumer goods sector, who can eliminate the costs of cheating with import substitution, should reduce their contribution margin,” he said.
At the same time, he fears that the authorities may distort the presidential decree. “In March 2020, there was already a proposal to reduce contributions by 15%, but at the last moment before the issuance of the decree someone ravaged the perverted brain, adding a clause there: a reduction only by an amount that exceeds the minimum wage. I think that the special services should work out for whose benefit we have been accepting such reservations for 10 years. This invalidates all efforts to foster entrepreneurship,” he said.
Alexander Borisov, President of the International Businessmen’s Association in Moscow, member of the Chamber of Commerce and Industry, agreed that reduced wages for SMEs are a real help.
“This is particularly useful for organizations with large workforces (more than 100 employees) and low salaries,” Borisov said. Said.
However, he expressed concern that tax authorities might interpret the new rule if it were temporary. “Quite often, at the end of one or more grace periods, the tax authorities said that the aid was misapplied and demanded additional fines and penalties. It was the same during the pandemic. Therefore, the decision whether to step out of the “shadows” for the sake of the benefit being prepared now depends on whether it will be permanent or temporary,” he said.
Encouragement to come out of the shadows
Moscow Business Ombudsman Tatyana Mineeva confirmed that any reduction in tax or other financial burdens on business is absolutely right and necessary.
“Many businesses will be able to go through a breakeven point, that is, to positive profitability. “Many of them will come out of the shadows in terms of wages,” Mineeva said.
He suggested arranging the total tax burden according to the sector so that SMEs’ working “in the short run” would be profitable. “The entrepreneur needs to set out from his own interests. The effect will be instant,” said Mineeva.
Alexey Sharov, managing director of Averta Group, calculated that as a result of lower insurance premiums, Russian small and medium-sized enterprises can save about 250 billion rubles per year. “This is the amount that the state budget will miss. This, of course, is a significant waste of money. But I also believe that there is no need to seek a source of compensation for deficiencies in income. The government has too much liquidity,” said the expert.